Not your father's Obamamobile
If you haven't heard, Chrysler declared bankruptcy this week. The government was trying to get Chrysler's debtholders to agree to a plan that would give them about $2 billion in cash. Some of the debtholders, with their loans backed up by real assets (the way you may have some loans backed up by your car or house) thought they would get more if those assets were sold at auction, rejected the plan.
They probably miscalculated. Normal bankruptcy procedures don't apply when other creditors are the government itself and a politically powerful union. I figure the other creditors will get no more than what the government offered.
What should be more interesting is the effects this has on the rest of the auto industry. Whatever happens to Chrysler will be a model for GM's bankruptcy, and GM's creditors should be watching closely to see what they can expect or if they should just accept what the government offers.
I also expect that in return for siding with the government through the bankruptcy, the union is finally going to get the big change they've been looking for - card check organizing. Until now, a factory can only become unionized by a secret vote of the employees. With the new bill, they only need a majority of the employees to sign union cards, which amounts to voting in public. Of course, employees would never be pressured to sign the cards. We'll probably see the UAW get its hooks into the Japanese-owned plants in the South, and labor relations descending to what we've had in Detroit for generations. I don't see myself owning any automaker stocks much longer.
They probably miscalculated. Normal bankruptcy procedures don't apply when other creditors are the government itself and a politically powerful union. I figure the other creditors will get no more than what the government offered.
What should be more interesting is the effects this has on the rest of the auto industry. Whatever happens to Chrysler will be a model for GM's bankruptcy, and GM's creditors should be watching closely to see what they can expect or if they should just accept what the government offers.
I also expect that in return for siding with the government through the bankruptcy, the union is finally going to get the big change they've been looking for - card check organizing. Until now, a factory can only become unionized by a secret vote of the employees. With the new bill, they only need a majority of the employees to sign union cards, which amounts to voting in public. Of course, employees would never be pressured to sign the cards. We'll probably see the UAW get its hooks into the Japanese-owned plants in the South, and labor relations descending to what we've had in Detroit for generations. I don't see myself owning any automaker stocks much longer.